Should You Sell the Family Home When Moving Into Aged Care?

Should You Keep or Sell the Family Home?

There is no single right answer when deciding whether to sell the family home for aged care.

Selling can help fund care, but keeping the home may also make financial sense depending on your circumstances.

When someone moves into residential aged care, the family home can become one of the biggest financial decisions the family needs to make. The decision can affect how accommodation costs are funded, ongoing cash flow, aged care fees and Age Pension entitlements.

✓ Sell the home and use the proceeds to help fund care

✓ Keep the home and fund care from other assets

✓ Keep the home and consider renting it out

✓ Consider how each option affects fees, cash flow and the Age Pension

Understanding the numbers before making a decision can help you choose the option that best fits your family’s circumstances.

Why Does the Family Home Matter in Aged Care?

The family home can be treated differently depending on whether we’re looking at aged care fees, Age Pension entitlements or how accommodation costs are funded.

Aged Care Fees

The value of the home may be included when assessing aged care fees, although special rules and caps can apply.

Age Pension

The treatment of the home for Age Pension purposes can change after someone permanently moves into residential aged care.

Accommodation Costs

Selling or keeping the home can affect how you fund the RAD or other accommodation costs and how much cash flow remains available.

This is why the best decision can’t usually be made by looking at the value of the home alone.

What Are Your Options for the Family Home?

When deciding whether to sell the family home for aged care, there are generally three broad options to consider. Each can produce a very different outcome depending on the person’s assets, income, accommodation costs and family circumstances.

1. Sell the Home

2. Keep the Home

3. Rent the Home

Potential Benefit

Releases capital to help fund the RAD or other care costs

Retains the property and potential future growth

Provides rental income while retaining the property

Cash Flow

Can simplify the financial position

May provide limited cash flow from the home

Can provide additional income to help fund ongoing care costs

Property Costs

Removes ongoing property expenses and maintenance

Property expenses and maintenance continue

Property, management and maintenance costs continue

Age Pension & Fees

Sale proceeds may change the Age Pension position

The home may receive different treatment under aged care and Age Pension rules

Rental income can also affect the financial position

Key Consideration

How the proceeds are invested or used matters

You still need to fund accommodation and ongoing costs

The overall outcome needs to be compared with selling

Flexibility

Once sold, the decision generally can't be reversed

May preserve flexibility for the family

Allows the family to retain the property

1. Sell the Home

Potential Benefit

Releases capital to help fund the RAD or other care costs

Cash Flow

Can simplify the financial position

Property Costs

Removes ongoing property expenses and maintenance

Age Pension & Fees

Sale proceeds may change the Age Pension position

Key Consideration

How the proceeds are invested or used matters

Flexibility

Once sold, the decision generally can't be reversed

2. Keep the Home

Potential Benefit

Retains the property and potential future growth

Cash Flow

May provide limited cash flow from the home

Property Costs

Property expenses and maintenance continue

Age Pension & Fees

The home may receive different treatment under aged care and Age Pension rules

Key Consideration

You still need to fund accommodation and ongoing costs

Flexibility

May preserve flexibility for the family

3. Rent the Home

Potential Benefit

Provides rental income while retaining the property

Cash Flow

Can provide additional income to help fund ongoing care costs

Property Costs

Property, management and maintenance costs continue

Age Pension & Fees

Rental income can also affect the financial position

Key Consideration

The overall outcome needs to be compared with selling

Flexibility

Allows the family to retain the property

What Could This Look Like in Practice?

To make this more practical, here’s a simplified example of how the family home can affect an aged care decision.

Margaret is 84 and moving permanently into residential aged care.

She owns her home and also has super, savings and other investments available to help fund her care.

Her family is trying to decide whether they should sell the home, keep it, or potentially rent it out.

Each option can affect how her accommodation costs are funded, the assets she retains, her ongoing cash flow and potentially her Age Pension and aged care fees.

The important question isn’t simply whether the home should be sold.

It’s which option produces the best overall financial outcome while also meeting Margaret’s care needs and the family’s objectives.

What Changes When You Sell the Family Home?

If Margaret sells her $1.2 million family home, the property is converted into cash. If she then uses $800,000 of the proceeds to pay the RAD, the composition of her assets changes significantly.

BEFORE

AFTER SELLING & PAYING THE RAD

Family Home

$1,200,000

Sold

RAD

Not Paid

$800,000

Financial Assets

$500,000

$900,000

Overall Position

$1,700,000

Same overall position. Different asset structure.

Margaret still has the same broad pool of wealth immediately after these transactions, but where that wealth is held has changed significantly.

That change can have implications for her aged care fees, Age Pension, investment income and ongoing cash flow.

What Changes If Margaret Keeps the Family Home?

If Margaret keeps the family home, she retains the property but still needs to fund the $800,000 RAD and her ongoing care costs from other resources.

BEFORE

AFTER KEEPING THE HOME

Family Home

$1,200,000

RAD

Not Paid

$800,000

Financial Assets

$500,000

Funding Required

Overall Position

$1,700,000

Depends on Funding Strategy

The home is retained, but the funding decision remains.

Keeping the family home means Margaret still owns the $1.2 million property, but her available financial assets alone are not enough to pay the full $800,000 RAD.

The family therefore needs to consider how the accommodation cost will be funded, including whether to pay all or part of the RAD, use other assets, or consider alternative funding arrangements.

What Changes If Margaret Keeps and Rents the Family Home?

If Margaret keeps the family home and rents it out, she retains the property and may generate additional income, but she still needs to determine how the $800,000 RAD will be funded.

BEFORE

AFTER KEEPING & RENTING THE HOME

Family Home

$1,200,000

RAD

Not Paid

$800,000

Financial Assets

$500,000

Funding Required

Rental Income

None

Additional Income

Overall Position

$1,700,000

Depends on Funding & Rental Outcome

The home is retained and may produce income, but more variables now need to be considered.

Renting the family home may provide additional cash flow while allowing Margaret to retain the property.

However, rental income, property expenses, the way the RAD is funded and the treatment of the home all need to be considered together before deciding whether this option produces a better overall outcome.

So, Should Margaret Sell the Family Home for Aged Care?

There isn’t enough information here to answer that question.

And that’s the important point.

Selling the family home may make it easier to fund Margaret’s accommodation costs, while keeping the home may preserve an important asset and potentially provide rental income.

But looking at the value of the home alone doesn’t tell us which option is better.

A Proper Comparison Needs to Look at the Whole Position

✓ How the RAD and other accommodation costs will be funded

✓ The impact on aged care fees

✓ Margaret’s Age Pension position

✓ Ongoing income and cash flow

✓ The assets and investments Margaret retains

✓ Margaret’s wishes and the family’s broader objectives

The goal isn't simply to sell or keep the family home.

The goal is to structure Margaret's finances so her care can be funded while achieving the best overall outcome for her circumstances.

This is where modelling the different options before making a decision can be valuable. Aged care advice can help compare the financial impact of selling, keeping or renting the home before the family commits to a particular strategy.

Not Sure What to Do With the Family Home?

If you’re unsure whether to sell the family home for aged care, keep it or rent it out, it can be worth understanding how each option may affect the overall financial position before making a decision.

Start with a conversation with one of our financial planners.

We can learn more about your family’s situation, explain how we may be able to help and discuss the next steps if more detailed aged care advice is required.

No obligation. Just an initial conversation to see whether we may be able to help.

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